The Competition and Consumer Authority (CCA) has approved the acquisition of a 70 percent stake in Engen Botswana by Fusionspark, but ordered a company linked to businessman Ramachandran Ottapathu to exit Reddy Group before the transaction can be implemented.
The decision places a major condition on Ottapathu’s expanding interests in Botswana’s petroleum industry, with the authority identifying potential competition risks arising from the overlap between his interests in Fusionspark and Ajantha Proprietary Limited.
Fusionspark is controlled by MMPG Limited, Surya Artha Holding Limited and Ottapathu, who is also chief executive officer and co-founder of Choppies Enterprises. His other interests include Far Property Company, Ajantha and Kamoso Africa.
According to the CCA, Ajantha holds a 75 percent stake in Reddy Group, which has interests in 67 retail station sites. The authority said the combination of Ajantha’s stake in Reddy Group and Ottapathu’s 30 percent interest in Fusionspark could create an incentive to align Reddy Group’s commercial decisions with those of the merged Engen business.
The CCA raised concerns that this could result in preferential treatment of Engen-branded fuel volumes at multi-branded Reddy Group sites, potentially disadvantaging rival fuel wholesalers and unaffiliated Engen dealers.
As a result, Ajantha must divest its entire 75 percent interest in Reddy Group to Botswana citizens or citizen-owned companies, including first-time investors, before the Engen transaction is implemented.
The CCA has also prohibited Ajantha from being directly or indirectly associated with Reddy Group for three years following implementation of the transaction.
Fusionspark’s acquisition will give it control of Engen Botswana, which has an estimated 15.9 percent share of Botswana’s fuel wholesale and retail market. Acer Petroleum Botswana has an estimated 0.2 percent share, taking the combined entity to about 16.1 percent.
The CCA has also required the merged entity to protect independent Engen dealers and citizen employees and competitively appoint at least five citizen-owned transporters within 12 months.